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Checklist

While much of the advice in this section is applicable to all businesses, the innovative nature of sustainable enterprises makes paying attention to the basics even more important.

An integrated financial strategy and product commercialization targets are essential. Among the 'musts' are:

  • A clear, tightly written statement of purpose;
  • A well-defined sense of where the company should be in one, two and five years' time;
  • Defining features of the business;
  • A thorough description of the market, including market research and analysis;
  • Details of the production, distribution and sales systems;
  • Development plans for a management team which fills all the roles needed to convert the business opportunity into a commercial success;
  • Precise costing and pricing;
  • Detailed cash flow and financial projections over a three- to five-year period;
  • A description of planned financing vehicles and the structure of the investment offering.

The entrepreneur will also need to attract various advisers such as board members and experts, and enter into agreements with other individuals and organizations (for example suppliers, sales agents, and brokers) that can boost the firm's capacity to secure financing and to deliver its business plan.

A sustainable enterprise that does not adhere to the tried and true rules of business planning will find it virtually impossible to obtain funds from capital markets.

Some of the aspects of business planning that are unique to sustainable enterprises are addressed in the following sections.

Markets

Markets for sustainable enterprises (whether environmental or otherwise) are relatively new. Many are also global. To reassure the investor that markets for the product or service exist or can be developed, entrepreneurs should:

  • Be able to describe and document existing markets for their product and how they markets will grow in the future;
  • Explain how they will enter the global marketplace in order to create economies of scale, perhaps through alliances and joint ventures with other firms;
  • Incorporate into their business plans marketing activities that will nurture the market and help it grow.

Technology

The environmental problems that confront the world, ranging from climate change and ozone depletion to toxic waste, are sometimes directly addressed by technological solutions offered by sustainable enterprises. This fact must be communicated to investors. Capital markets are generally not well informed about the scale of environmental degradation or about such drivers as global environmental agreements. The economic benefits of technologies such as wind turbines, which are rapidly becoming more competitive, are not well understood by investors.

Sustainable entrepreneurs should:

  • Clearly link the market potential for their product or service to existing environmental problems;
  • Quantify the environmental and cost savings that their technologies can offer;
  • Identify the ways in which their technology reduces environmental liability and creates a cleaner environmental profile for customers.

The sustainable entrepreneur will find technology a powerful card to play when seeking investment. It has two potentially strong suits. Firstly, when the technology's key selling feature is cost savings, the investor readily understands the potential return. Secondly, when there is an opportunity to finance 'first on the street' technology, the investor may appreciate getting in early.

Operations

The sustainable enterprise respects the environment by minimizing energy and resource consumption and reducing waste generation. These practices reduce the firm's operating costs and liability exposure.

Sustainable entrepreneurs should emphasize these advantages in their business plan by:

  • Highlighting the cost reductions that are achieved by employing responsible environmental practices;
  • Noting practices that will insulate the company against future cost increases (such as waste disposal levies or oil price rises);
  • Explaining that liability risks are reduced by responsible environmental practices.

In summary, sustainable entrepreneurs can put themselves in a stronger position to raise capital by ensuring that their business plan highlights the emerging markets from which the business will profit, the technological solutions the company offers to environmental problems, and the sustainable manner in which the company operates.

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